AAR CORP (AIR) Stock Fundamental Analysis
NYSE:AIR - New York Stock Exchange, Inc. - US0003611052 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to AIR. AIR was compared to 65 industry peers in the Aerospace & Defense industry. There are concerns on the financial health of AIR while its profitability can be described as average. AIR has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
In the past year AIR was profitable.
In the past year AIR had a positive cash flow from operations.
Each year in the past 5 years AIR has been profitable.
Of the past 5 years AIR 4 years had a positive operating cash flow.
1.2 Ratios
The Return On Assets of AIR (-0.44%) is worse than 63.08% of its industry peers.
AIR has a Return On Equity of -1.07%. This is in the lower half of the industry: AIR underperforms 60.00% of its industry peers.
AIR has a Return On Invested Capital (4.64%) which is in line with its industry peers.
The Average Return On Invested Capital over the past 3 years for AIR is in line with the industry average of 7.87%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.44% | ||
| ROE | -1.07% | ||
| ROIC | 4.64% |
ROA(3y)3.83%
ROA(5y)2.8%
ROE(3y)6.5%
ROE(5y)4.72%
ROIC(3y)6.1%
ROIC(5y)5.14%
1.3 Margins
In the last couple of years the Profit Margin of AIR has grown nicely.
Looking at the Operating Margin, with a value of 5.21%, AIR is in line with its industry, outperforming 46.15% of the companies in the same industry.
AIR's Operating Margin has improved in the last couple of years.
AIR has a worse Gross Margin (18.82%) than 67.69% of its industry peers.
AIR's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 5.21% | ||
| PM (TTM) | N/A | ||
| GM | 18.82% |
OM growth 3Y2.59%
OM growth 5Y3.1%
PM growth 3Y-2.68%
PM growth 5Y41.67%
GM growth 3Y4.53%
GM growth 5Y3.5%
2. Health
2.1 Basic Checks
AIR has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for AIR has been increased compared to 1 year ago.
AIR has more shares outstanding than it did 5 years ago.
AIR has a worse debt/assets ratio than last year.
2.2 Solvency
AIR has an Altman-Z score of 2.63. This is not the best score and indicates that AIR is in the grey zone with still only limited risk for bankruptcy at the moment.
AIR has a Altman-Z score (2.63) which is comparable to the rest of the industry.
AIR has a Debt/Equity ratio of 0.86. This is a neutral value indicating AIR is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.86, AIR is not doing good in the industry: 69.23% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.86 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.63 |
ROIC/WACC0.49
WACC9.41%
2.3 Liquidity
A Current Ratio of 2.82 indicates that AIR has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 2.82, AIR is in the better half of the industry, outperforming 66.15% of the companies in the same industry.
A Quick Ratio of 1.39 indicates that AIR should not have too much problems paying its short term obligations.
AIR's Quick ratio of 1.39 is in line compared to the rest of the industry. AIR outperforms 49.23% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.82 | ||
| Quick Ratio | 1.39 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 10.70% over the past year.
AIR shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.34% yearly.
AIR shows a strong growth in Revenue. In the last year, the Revenue has grown by 21.07%.
Measured over the past years, AIR shows a small growth in Revenue. The Revenue has been growing by 2.48% on average per year.
EPS 1Y (TTM)10.7%
EPS 3Y35.99%
EPS 5Y5.34%
EPS Q2Q%16.47%
Revenue 1Y (TTM)21.07%
Revenue growth 3Y11.96%
Revenue growth 5Y2.48%
Sales Q2Q%19.55%
3.2 Future
The Earnings Per Share is expected to grow by 16.14% on average over the next years. This is quite good.
AIR is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.31% yearly.
EPS Next Y14.32%
EPS Next 2Y16.8%
EPS Next 3Y16.14%
EPS Next 5YN/A
Revenue Next Year17.19%
Revenue Next 2Y10.98%
Revenue Next 3Y8.98%
Revenue Next 5Y3.31%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
AIR is valuated correctly with a Price/Earnings ratio of 14.06.
92.31% of the companies in the same industry are more expensive than AIR, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of AIR to the average of the S&P500 Index (28.33), we can say AIR is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 11.24, the valuation of AIR can be described as reasonable.
Based on the Price/Forward Earnings ratio, AIR is valued cheaper than 96.92% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.37, AIR is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.06 | ||
| Fwd PE | 11.24 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AIR indicates a somewhat cheap valuation: AIR is cheaper than 75.38% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 14.14 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
A more expensive valuation may be justified as AIR's earnings are expected to grow with 16.14% in the coming years.
PEG (NY)0.98
PEG (5Y)2.64
EPS Next 2Y16.8%
EPS Next 3Y16.14%
5. Dividend
5.1 Amount
No dividends for AIR!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
50.91
-0.11 (-0.22%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)
Earnings (Next)
Inst Owners98.47%
Inst Owner Change0.12%
Ins Owners2.44%
Ins Owner Change-2.16%
Market Cap1.84B
Analysts82
Price Target81.35 (59.79%)
Short Float %1.77%
Short Ratio2.67
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly Dividend0.05
Dividend Growth(5Y)-28.92%
DP0%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.76%
Min EPS beat(2)1.68%
Max EPS beat(2)5.83%
EPS beat(4)4
Avg EPS beat(4)3.21%
Min EPS beat(4)1.68%
Max EPS beat(4)5.83%
EPS beat(8)8
Avg EPS beat(8)3.65%
EPS beat(12)12
Avg EPS beat(12)3.95%
EPS beat(16)14
Avg EPS beat(16)3.65%
Revenue beat(2)1
Avg Revenue beat(2)-0.05%
Min Revenue beat(2)-3.93%
Max Revenue beat(2)3.84%
Revenue beat(4)2
Avg Revenue beat(4)0.01%
Min Revenue beat(4)-3.93%
Max Revenue beat(4)3.84%
Revenue beat(8)4
Avg Revenue beat(8)0.7%
Revenue beat(12)7
Avg Revenue beat(12)1.07%
Revenue beat(16)10
Avg Revenue beat(16)1.11%
PT rev (1m)-0.93%
PT rev (3m)0.1%
EPS NQ rev (1m)-3.63%
EPS NQ rev (3m)-1.94%
EPS NY rev (1m)0.16%
EPS NY rev (3m)3.02%
Revenue NQ rev (1m)-2.83%
Revenue NQ rev (3m)-0.95%
Revenue NY rev (1m)-1.47%
Revenue NY rev (3m)0.88%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.06 | ||
| Fwd PE | 11.24 | ||
| P/S | 0.69 | ||
| P/FCF | N/A | ||
| P/OCF | 199.77 | ||
| P/B | 1.55 | ||
| P/tB | 4.27 | ||
| EV/EBITDA | 14.14 |
EPS(TTM)3.62
EY7.11%
EPS(NY)4.53
Fwd EY8.9%
FCF(TTM)-0.64
FCFYN/A
OCF(TTM)0.25
OCFY0.5%
SpS74.31
BVpS32.76
TBVpS11.93
PEG (NY)0.98
PEG (5Y)2.64
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.44% | ||
| ROE | -1.07% | ||
| ROCE | 6.04% | ||
| ROIC | 4.64% | ||
| ROICexc | 4.81% | ||
| ROICexgc | 7.26% | ||
| OM | 5.21% | ||
| PM (TTM) | N/A | ||
| GM | 18.82% | ||
| FCFM | N/A |
ROA(3y)3.83%
ROA(5y)2.8%
ROE(3y)6.5%
ROE(5y)4.72%
ROIC(3y)6.1%
ROIC(5y)5.14%
ROICexc(3y)6.37%
ROICexc(5y)5.48%
ROICexgc(3y)7.98%
ROICexgc(5y)6.63%
ROCE(3y)7.94%
ROCE(5y)6.7%
ROICexcg growth 3Y2.94%
ROICexcg growth 5Y-1.6%
ROICexc growth 3Y-7.69%
ROICexc growth 5Y-7.54%
OM growth 3Y2.59%
OM growth 5Y3.1%
PM growth 3Y-2.68%
PM growth 5Y41.67%
GM growth 3Y4.53%
GM growth 5Y3.5%
F-Score2
Asset Turnover0.94
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.86 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 5.2 | ||
| Cap/Depr | 56.69% | ||
| Cap/Sales | 1.2% | ||
| Interest Coverage | 2.25 | ||
| Cash Conversion | 4.68% | ||
| Profit Quality | N/A | ||
| Current Ratio | 2.82 | ||
| Quick Ratio | 1.39 | ||
| Altman-Z | 2.63 |
F-Score2
WACC9.41%
ROIC/WACC0.49
Cap/Depr(3y)76.7%
Cap/Depr(5y)63.04%
Cap/Sales(3y)1.24%
Cap/Sales(5y)1.11%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)10.7%
EPS 3Y35.99%
EPS 5Y5.34%
EPS Q2Q%16.47%
EPS Next Y14.32%
EPS Next 2Y16.8%
EPS Next 3Y16.14%
EPS Next 5YN/A
Revenue 1Y (TTM)21.07%
Revenue growth 3Y11.96%
Revenue growth 5Y2.48%
Sales Q2Q%19.55%
Revenue Next Year17.19%
Revenue Next 2Y10.98%
Revenue Next 3Y8.98%
Revenue Next 5Y3.31%
EBIT growth 1Y-5.28%
EBIT growth 3Y14.86%
EBIT growth 5Y5.65%
EBIT Next Year65.14%
EBIT Next 3Y25.93%
EBIT Next 5YN/A
FCF growth 1Y-101.75%
FCF growth 3Y-47.1%
FCF growth 5Y-22.59%
OCF growth 1Y-49.45%
OCF growth 3Y-25.44%
OCF growth 5Y-8.34%